Unit 8 industrial spaces

GEOGRAPHY AND HISTORY DEPARTMENT
Teacher: Maite Fresnillo

UNIT 8: INDUSTRIAL SPACES

Industrialization requires the presence and exploitation of a series of elements such as
raw materials and energetic resources. Prior to begin analysing the characteristics of
industrial development, we are going to analyse some essential elements involved and
their characteristics.

1. Raw materials

Though Spain's mining sector, including the coal-mining industry, employed only
80,000 persons and was responsible for only about 1 percent of the country's GDP in
the late 1980s, Spain was an important producer of minerals.

Spanish mineral production was of particular significance to the EC because Spain was
its sole producer of mercury, natural sodium sulphate, and tantalite. Moreover, Spain
mined approximately 9 percent of all EC copper, and important percentages of
antimony, gold and pyrite, silver, lead and magnetite, iron ore (38 per cent) and
tungsten, and fluorspar and zinc. In addition to mining, Spain was an important
processor of raw minerals, both those produced domestically and those imported from
abroad. Although Spain was the most self-sufficient member of the EC with regard to
minerals, imports were needed to meet about 30 percent of its needs.

In the mid-1980s, Spain's mining industry suffered from the depressed state of the
world minerals market, and the production of most substances had declined. The drop
in the value of the dollar, the dominant currency in the mineral trade, further reduced
the sector's profits, which had already been damaged by declining sales. Spanish
production of copper, tin, and wolfram all declined by more than 75 percent in 1987.
The production of iron, pyrites, and fluorspar also dropped significantly in the same
year. Zinc, potassium salts, uranium, and lead production remained steady during this
period, however.

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These mineral resources were used in the following way:
a) Metallic minerals: Found in the sides of the Herzinian base, they are used in
basic industries such as iron and chemistry.
b) Non-metallic minerals: Linked to Palaeozoic formations, they are used in
construction and chemistry.
c) Industrial stones: They can be found in different places and their main use is in
construction.

Mineral production is not enough to supply Spanish industry so they have to resource
to the foreign market. Some of the products are exported but the value of
exportations is always below that of importations.

Since the entrance in the EU the mine policy has these targets:
- increase the competitiveness of interior mining
- improve environment and mines’ habitats
- encourage research and technical development.

As a result of this policy several mines have been closed due to their lack of
competitiveness.

2. Energy

Spain is poor in energy resources, with the exception of coal. Rapid industrial growth
has intensified the problems caused by insufficient oil reserves, dwindling supplies of
easily accessible high-quality coal, and inadequate water for power generation. Until
the early 1980s, Spain depended increasingly upon imported petroleum, and overall
energy consumption continued to grow in the 1973-79 period. Following adjustment
to a slower rate of economic growth and to the changed energy market of the 1970s,
Spanish energy consumption declined in the early 1980s.

The National Energy Plan (Plan
Energetico Nacional--PEN), the
basic statement of official energy
policy, was first formulated in
1978. Revised in 1983 to cover the
1984-93 period, the new PEN
aimed at a rationalization of
energy consumption and a
reduction in Spain's dependence
on imported energy. It pressed, in
addition, for a reorganization of
the oil industry and for a financial
reorganization of the electricity
industry. In contrast to the 1978-87 plan, it reduced the role of nuclear energy.

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2.1. Main energy sources

2.1.1. Coal

Spain's coal reserves are found primarily in Asturias, with smaller deposits located near
south-western Seville, Cordoba, and Badajoz, and in north-eastern Catalonia and
Aragon (Spanish, Aragon). Most of the country's lignite is located in Galicia. Domestic
coal is generally of poor quality, and, because of the structure of Spanish deposits, it is
more expensive than imported coal.

Higher oil prices have
spurred domestic coal
production. Annual
production in the early
1970s amounted to
about 10 million tons of
coal and 3 million tons of
lignite. By the mid-1980s,
the industry produced 15
million tons of coal and
23 million tons of lignite
annually. This higher rate
of production was insufficient to meet domestic needs because coal had come to
supply about 25 percent of Spain's needed energy, compared with about 16 percent in
the early 1970s. About 5 million tons of foreign coals were imported per year.

Over the years, there had been little change in patterns of coal consumption. Hard
coal, used mainly for the generation of electricity, accounted for 65 percent of total
demand. The steel and cement industries were the two next-largest consumers.

The main problems of coal production are:
- Some of the richest mines are exhausted or of low quality
- Many mines present problems to be exploited
- Business size is small
- Demand has been reduced
- With the entrance in the EU the prices liberalised

From the thirteen regions in which coal is produced the main is that of Asturias, Leon
and Palencia but it can not supply the internal demand.

The main use of coal production is for generating thermal electricity, but these centrals
are not used unless there is deficit in hydro electrical production. The problem of
thermal centrals is that they can be highly pollutant, for instance, creating acid rain.

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Coal is also used in iron industries and for concrete fabrication.

In line with the energy rationalization policies set by PEN, the government sought to
increase the efficiency of the coalmining sector by closing down high-cost mines and
by providing financial aid for the industry's modernization. To encourage the cement
and other industries to convert from oil to coal, the government allowed them to
import duty-free coal. The government also made efforts to substitute the use of oil
for coal in urban areas.

2.1.2. Petroleum

Although oil continued to be Spain's major source of energy, it had diminished in
importance significantly since 1973. Oil consumption grew steadily between 1973 and
1979, reaching 50 million tons in that last year, but by 1985 it had declined to 39
million tons. Oil accounted for two-thirds of the country's primary energy
requirements throughout the 1970s, but by the mid1980s the figure had dropped to
just over half. In 1985 alone, Spanish industry saved 40 billion pesetas (US$260 million)
by replacing 500,00 tons of oil consumption with coal and natural gas.

In 1985 Mexico, responsible for 19.7 percent of Spain's petroleum imports, was the
largest single supplier of Spain's energy needs, and in the mid-1980s Latin American
countries provided Spain with about one-quarter of its imported oil. Africa's share--
Nigeria being the most important supplier dropped. Middle Eastern countries provided
27.4 percent in 1985 and 29.6 percent in 1987. Western Europe's share rose. Efforts
were under way to lessen Spain's dependence on Middle Eastern oil and to increase
imports from Mexico.

In the 1980s, imported petroleum entered Spain via eight ports. The three largest, in
terms of vessel capacity, were Algeciras (330,000 deadweight tons), Malaga (330,000
tons), and Cartagena (260,000 tons).

Spain possessed a small domestic
oil production capability that
yielded only 1.6 million tons in
1987. Despite a sizable exploration
effort, only a few small fields and
two medium-sized ones were
discovered. The Casablanca oil
field, discovered in 1983, yielded
90 percent of Spain's domestic oil
production in 1987, but it was not large enough to offset an overall decline in Spanish
production. The fall in oil prices in the 1980s further reduced the country's exploration
efforts.

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The Spanish oil industry imported and refined foreign crude petroleum; it distributed
petrochemical products within Spain; and, in the mid-1980s, it exported about 10
million tons of finished petroleum products per year.

As with some other sectors of the Spanish economy, the domestic oil industry had
been brought under state control. Distribution of petroleum products had been in the
hands of the state monopoly, Compania Arrendataria del Monopolio de Petroleos
(CAMPSA), since 1927, and large portions of the shipping and refining system were
state owned.

To rationalize the petroleum industry and to make it able to withstand foreign
competition, the National Institute for Hydrocarbons (Instituto Nacional de
Hidrocarburos--INH) was formed in 1981 in order to direct CAMPSA and those parts of
the oil, gas, and petrochemical industry supervised by INI. By the mid-1980s, INH was
responsible for more than 1 percent of the Spanish GDP, and it claimed 20,000
employees. To prepare for Spain's entry into the EC, after which state monopolies
were required to be phased out, all of INH's holdings, with the exception of the state
gas company, Empresa Nacional del Gas (ENAGAS), were placed under a new holding
company in the late 1980s. The company, Repsol, which had a stock market listing, was
gradually to allow a greater role for private capital in the petroleum industry. By 1988
Repsol had become Western Europe's seventh largest petroleum company, and its
management planned to continue to control about half of the Spanish market once
that market was fully opened to foreign firms in 1992. EC membership rendered
CAMPSA's future uncertain, for it would no longer be allowed its distribution
monopoly. The Treaty of Accession that brought Spain into the EC stipulated that
specific amounts of nine groups of petroleum products from foreign suppliers would
have access to the Spanish market. In 1986 these products were to have a 5 percent
share of the domestic market--a share that was to increase by 20 percent (of this 5
percent) each year thereafter.

2.1.3. Natural gas

In order to reduce Spain's dependence on
imported oil, PEN encouraged natural gas
consumption. Efforts to redirect the use of
fuels were successful, and in the 1980s the
consumption of natural gas increased faster
than that of any other fuel. Total natural gas
demand doubled between 1973 and 1984.

Domestic production of natural gas began in
1984 with the development of the Serrablo
field; two years later the Gaviota field went into operation. In 1987 domestic
production supplied about one-sixth of Spain's natural gas consumption, and observers
anticipated that its share might rise to as much as one-third by 1990. Domestic
production shortfalls were taken up by imports from Algeria and Libya under long-term

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contracts. In 1988 it was agreed that Spain's gradually expanding gas pipeline network
would be connected to the European network, and Norwegian gas was scheduled to
begin arriving in Spain in 1992.

2.1.4. Nuclear energy

It is produced by fission but research on
fusion still being carried on.
Fission produced nuclear power started
in 1975, as a consequence of petroleum
crisis. It has increased after 1984
although public opinion’s opposition.

Uranium is produced in Ciudad Rodrigo
(Salamanca) and Don Benito (Badajoz).
It is enough to supply the internal
demand of the product.

The main application is electricity
production but it also has other uses such as in medicine.

The main problems of fission produced energy are:
- dependency towards foreign technology
- potential security risks
- atomic waste elimination
- dismantle centrals no longer in use.

2.1.5. Hydraulic energy

It is produced using the energy generated by water in dams. When the water jumps it
moves a turbine and this mechanic energy is transformed into electricity. It was very
important from 1940 to 1972 but it was reduced later when thermal electricity started
being produced.

The main production is located in the North of Spain and the Mediterranean coast
where the slops make easier the production of the energy. The main use is electricity
production.

Its main benefit is the easiness to produce it. But it has problems as well: different
production depending on the water flows or the problems related to its use for
watering agricultural spaces of for home supplies.

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2.1.6. Alternative powers

Their consumption has increased since the beginning of petroleum crisis. Thanks to
them dependency has been reduced because these energies are locally produced.
Their main advantages are:
- they are inexhaustible
- they are clean
- they are not concentrated
geographically
- they can be used even in
regions of low consumption

Spain presents good conditions for the production of alternative energies, anyway,
there is not too developed at the moment. The main use is produce thermal, electrical
or mechanic energy.

The alternative powers used in Spain are:

a) Hydraulic mini-centrals: located in small rivers
b) Wind power: used for mechanic or electrical power
c) Biomass: it uses waste products of agriculture, livestock and forestry. The
power is generated by combustion. From one of the varieties, the green one,
bio-fuels are produced.
d) Sun power: thermal and photovoltaic energy are produced
e) Geothermal: it uses the internal heat of earth. It is use for heating.

2.2. Electricity production

Although Spain's mountainous terrain would appear to be well suited to hydroelectric
power production, the scarcity of water limited such potential and was the principal
reason for Spain's heavy dependence on thermal power. In 1986 only 27.2 percent of
the country's electricity came from hydroelectric plants, while 50.6 percent came from
conventional thermal plants, and 22.2 percent came from nuclear plants. The most
important fuel for the production of electricity was coal, which generated about 40
percent of the total. In 1987 the production of electricity amounted to 132,000 million
kilowatt hours--about six times the amount produced in 1960 and twice the
production level of 1970. The total installed capacity of the predominantly privately
owned electrical system was about 40 gig watts--an amount large enough to meet the
country's needs and to allow some exports. In the second half of the 1980s, the growth
of the demand for electrical power was less than anticipated, and Spain had a supply
adequate to last until the mid-1990s. The Spanish level of per capita electrical power
consumption was among the lowest in Western Europe, surpassing only those of
Greece and Portugal.

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A key element in the future of Spain's electrical power industry was the role to be
assigned to nuclear power. Nuclear power was an important factor because of scarce
petroleum reserves, the limited potential for hydroelectric power production, and the
presence of significant uranium deposits. The first PEN, drawn up in 1978, emphasized
the role that nuclear power would play in meeting the nation's ever-increasing need
for electricity. The revised PEN of 1984 postponed the opening of the Lemoniz Nuclear
Power Plant for political reasons, and it continued the mothballing of three other
nuclear plants. The government decided, nonetheless, that if the demand for
electricity increased by more than 3 percent, work on one of the plants might be
restarted. The new PEN also emphasized the benefits of increased natural gas
consumption.

2.3. Energetic policy

When the petroleum crisis started a group of 21 countries created the International
Energy Agency in order to establish the main lines for energetic policies, being the
main points:
- reduce consumption
- substitute petroleum by
other powers
- encourage research

Energetic policies started late in
Spain. The Plan Nacional de la
Energia was designed to reduce dependency towards petroleum and, at the moment,
a Plan de Energías Renovables is in force.

The main lines of energetic policy are:
a) EU energetic policy: it has started in 1983 with the following targets:
a. Assure supplies and, for that, diversification is essential
b. Reduce consumption and use of non exhausting energies
c. Create an internal energetic market
d. Control the negative influence on environment

b) New EPN will last until 2010 so that:
a. Consumption of gas will increase
b. Non exhausting energies will increase, and petroleum too
c. Continue with nuclear power and reduce coal

c) Plan de Energías Renovables (1999-2006): The aim is to meet some of the data
in relation to non exhausting energies.

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3. Spain’s industry 1855-1975

3.1. Historical development

a) Beginnings of industrialization (1855-1900)

This development started later than in other European countries. The reasons for it are
related to the difficult conditions:
- Scarcity of some raw materials and energetic products
- Lack of entrepreneurship
- Few capitals were available
- Technological backwardness
- Offer of limited products
- Complicate foreign situation
- Inappropriate industrial policy

A majority of industrial production was
dependent on the high tariffs created for
foreign products during the Restoration
settlement.

b) First third of the 20th century (1900-1936)

It was the time of industrial development due to:
- development of coal mining, mainly during WW1
- mineral exportations
- developments of second industrial revolution
- increase of national investments
- public works were developed during Primo de Rivera’s dictatorship
- industrial protectionism.

c) Civil War and war aftermath (1936-1939)

Industrial development stopped. Industries were destroyed and due to the autarky of
the war aftermath industries could not get the energetic resources required. The crisis
continued until the fifties.

d) Between 1960 and 1975

It was the period of developmentalism, due to these factors:
- liberalisation of imports
- expansion of capitalism economy
- good situation of the country

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- low energetic prices
- Development Plans designed by the government.

3.2. Industrial production

Since 1955 the innovations of first and second industrial revolutions had been
acquired. Thanks to that different sectors evolved.

During the second half of 19 th century the industries that were significant were iron
and cotton textiles. The first one was located in Andalucia and the North (Asturias,
Cantabria) and the second in Catalonia.

During the first third of 20th century the leading sector were related to basic and
consumption industries:
a) Basic industries: iron, refineries, petro-chemistry were supported by the
state. The INI was created and pushed a sector that required strong
inversions but had low profitability. These sectors were not appropriate for
private investments.
b) Consumption equipment industry (textile, shoe making) increased at the
same time as the citizens life conditions. Other products such as cars and
electrical appliances for homes developed too due to similar reasons.
c) Industrial equipment industry (machinery) did not develop too much due to
the technological backwardness. Anyway some sectors continue being
important because they counted with natural resources and they required
unskilled workers.

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3.3. Industrial structure

The characteristic of industrial structure during the period 1855-1975 are:

a) Production system acquired the characteristics of serial fabrication since the
beginning of 20th century. It was applied in big factories so that it was possible
to produce homogeneous articles at low prices. There were also numerous
small factories working with traditional methods.
b) Workers were abundant and given that the industry did not demand skulled
people their situation was not regulated at the beginning.
c) Size of enterprises: there were huge contrasts:
a. Small factories and workshops: they required low investments, simple
technology and, as a consequence, they were not competitive. They
were specialised in consumption products and benefited from
protectionism.
b. Big factories were scarce and they were mainly linked to iron industry.
They received the support of the State with the creation of the INI.

d) Technological backwardness and dependency from foreign technology, capital
and energy. The main characteristics were:
a. Technological backwardness was provoked by protectionism because
factories were not forced to compete in order increase productivity.
b. Technologically dependent because there were little attempts to renew
industries.
c. Financial dependency because national inversion was scarce.

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d. Energetic dependency because there was not enough ability to exploit
coal and hydrocarbons.

All in all, Spain industrialised but due to its limits it was always located in a peripheral
position in the world.

3.4. Trends and criteria to create industries

When an industry is created criteria such as the reduction of expenses are taken into
account. There are several factors.

a) Traditional factors:
a. Be close to raw material and power generation
b. Existence of a wide market
c. Abundant and suitable workers
d. Good communication means for distributing the products
e. Capitals or ability to attract them
f. Supporting sectors, this is, other factories to create infrastructures and
equipment
g. Industrial policies favourable to industrial development.

b) Industrial concentration trend:
During the period considered industries trend to concentrate near cities because in
this way it was easier for them to obtain benefits: complementary industries,
transports, workers, workshops, equipment, information and innovations.

3.5. Industrial areas

a) From the very beginning the periphery of Spain was the leading area for
industrialisation, including Basque Country, Catalonia and Levante, in addition
to Madrid. The reasons for that concentration were:

- Their location eased the obtaining of raw materials and normally they were
located near mines
- Port infrastructures available
- Industrial regions: they were in cities where some of them could find their
own markets, as in the case of Madrid.

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There were other little industries sometimes linked to traditional agricultural products
but without any concrete location pattern.

b) During the first third of the 20th century and Franco’s time industries were
distributed to try to eliminate the disequilibrium between regions.
- fix the hegemonic situation of former industries
o the region around Biscay was specialised in basic industries
o the Mediterranean region was more diversified, with light industries
and small industries
o Madrid was an area highly diversified.
- creation of new industrial spaces: there were related to communication
axis, such as the Ebro and Mediterranean, Galicia’s coast and Occidental
Andalusia, thanks to the state policy; or very located places devoted to a
concrete production, development hubs.
- Rest of areas of Spain counted with scarce or none industries, with the
exception of provincial capitals linked to traditional productions.

3.6. Industrial policy

In this period the main industrial policy was the interventionism of State in industry.
The measures taken were:
a) Protectionist policy: Spanish industry did not have foreign competence because
foreign products were not competitive. This measure was not good because
even if it provoked the development of industries encouraged by the good
perspectives at state level, it impeded the technical modernization.
b) Creation of public industries in sectors that did not attract private capitals.

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c) Measures to try to reduce the differences between different regions. These
measures were put together in the Development Plans (1964-1975).

In order to stimulate industries they realised a series of actions:
- Promotion and development hubs were created following the French
model. There were created to minimize the differences between regions, to
develop those that had fallen behind. Industrial development hubs were
created in cities with a certain industrial base (Coruña, Vigo, Seville,
Valladolid, Zaragoza, Granada, Cordoba, Oviedo, Logroño and Villagarcia de
Arosa). Promotion hubs were targeted to underdeveloped regions. The
result was not as good as expected because they did not generate so many
jobs as expected and their influence in other industries was limited.
- Especial treatment to some industries in concrete areas: regions with
priority to create industries, in cases of areas appropriated for certain
activities, industrial estates or parks distributed in the whole territory and
big areas for industrial development created in the Third Development Plan.
In those they try to create development axes, with good communications
linking cities and industrial nucleus.

4. Industrial crisis and restructuring

4.1. Industrial crisis

The crisis affected all industrial countries since 1975. It was very negative for Spain
that lacked of a strong industry.

Reasons for the crisis. There were exterior and interior.

a) Exterior causes:
a. Energy became more expensive, mainly due to the increase of
petroleum prices.
b. The former technological cycle was exhausted
i. Technologies were delayed confronted with the new ones such
as microelectronics, computers, telecommunications
ii. New economic sectors were above the previous ones.
iii. New flexible production systems (decentralised, in small
factories)
c. New characteristics of the demand, which made necessary
diversification and continuous reforms.
d. Globalization of economy and competence of the New Industrialised
States.

b) Interior causes:

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a. Inadequacy of structures of Spanish industries: not very specialised,
high energetic consumption, scarce modernization, dependency of the
exterior, abundant debts, lack of self-financing.
b. Historical situation: doubts about the future during the transition, after
Franco’s death.

Consequences of the crisis

As a consequence of the crisis many industries closed down, production reduced,
results reduced and debts and unemployment increased. The amount of industry in
GDP was reduced and the peripheral role of Spain in world economy was reinforced.

4.2. Policy and crisis confronted: industrial restructuring

To answer to the crisis the Society for Development and Economic Cooperation was
created in 1975. The restructuring had two parts: the rationalization and re-
industrialization. State gave aids of different kinds: financial, fiscal and labour.

a) Industrial rationalization or restructuring: in the case of industries that would
re-adapt to the new characteristics of the market reforms were done. The main
measures were:
a. Adjust offer and demand, eliminating over production
b. Regulation of staff
c. Specialise in products of the highest demand
d. Application of new organizational and management systems.

b) Re-industrialization
It affected two aspects:
- Technological modernization in sectors that could develop in the future.
- Introduction of new activities with better future perspectives. For that
Areas of Urgent Re-industrialization were created.

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As a consequence areas that were very specialised had a diversification of
industries. Anyway, they were deficiencies too: creation of fewer work places than
expected, the majority of the economic aids went to big industries and the
disequilibrium between regions enlarged.

5. Spain’s industry today

5.1. Third industrial revolution and industrial recovery

Although industrial restructuring is not completely finished, some sectors are already
experiencing the changes of a new industrial revolution.

Changes of the third industrial revolution

The basis of this phase of industrialization is innovation,
this is, the use of new technologies in the productive
process. The new technologies are those of the
information and microelectronic.

a) Changes in industrial production

Technological revolution has affected sectors linked to
high technology:
- Information technology: telecommunications, computers
- Automation: robots, assisted design
- Set up tools: equipment using abundant information

b) Changes in industrial structure
- Changes in the way of production: decentralization (factories with different
plants, subcontracting, formation of enterprises nets) and flexibility of the
production.
- Changes in the size of the factories, they tend to be smaller.
- Changes in the staff because they must be skilled but due to automatic
processes other ways of hiring personal have appeared, such as temporary,
free-lance, and others.
- Outsourcing (terciarizacion) of the industry

c) Changes in setting up industries
- to reduce costs factories move to places where they can obtain higher
benefits
- as they demand qualified works and a lot of administrative work, they can
be concentrated in areas with enough equipments.

d) Changes in industrial policy

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- limit of State intervention and open to foreign influence inside the
globalization trend
- endogenous industrialization is supported
- environmental awareness

Influence of third industrial revolution in Spain

Thanks to the third industrial revolution developed countries are recovering and as a
consequence factories and work opportunities have increased.

In Spain this influence started in 1985 that only stopped in 1990-1994, as in other
countries. Since that moment it has evolved full of dynamism. All in all, problems have
not been completely eradicated and Spanish industry continues having difficulties in
productivity, structure and the link to the land and environment.

5.2. Industrial production: sector structure.

The industrial sectors involved in the restructuring process still being important. In the
most dynamic there is foreign capital and sectors related to technology are a bit
backward.

5.2.1. Traditional sectors in restructuring process

They have been negatively affected by:
- reduction in demand
- lack of competitiveness
- European policies for limiting production and subventions

Sectors affected are:
a) Basic metallurgy and metallic transformation
a. Iron industry: It has been united to other European factories. The
results have been reduction of costs, diversification of production and
improvement of quality. In Mediterranean, Basque Country and
Asturias.
b. Industries of metallic transformation: they make machines of any kind
and are located in the triangle Barcelona-Basque Country-Madrid.
b) Production of electrical equipment for houses: it is being changed in order to
specialise the production, industrial concentration and enlarge and diversify
market. As a result many factories have closed down and workers situation has
been regularised.
c) Shipbuilding: it is concentrated in Galicia, Cantabria, Basque Country and
Andalusia. It has been limited and it tends to specialise, for instance, in
repairing.
d) Leather and shoemaking: it is important in Catalonia and Valencia. It has
introduced new technologies and for that foreign capitals have been used. On

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the other hand, there are a lot of small factories. It must compete with foreign
cheap products so that they concentrate in quality and design.

5.2.2. Dynamic industrial sectors

They will have plenty of resources in the future due to:
- high productivity and specialization
- healthy enterprise structure
- demand assured
In this sector foreign investments are frequent.

a) Car industry: it has suffered a strong restructuration because it was
technologically backwards. It has improved but it needs technological
innovations.
b) Chemistry: It is one of the basic industries in Spain, but its situation is not good
because it depends on foreign capitals, it has to face strong competence and it
has scarce investigation level. It has two sub-sectors:
a. Petro-chemistry or basic chemistry, normally related to refine
b. Transformation chemistry, in small factories: pharmacy perfumes,
painting materials, paper. Exports have increased.

c) Sector of agriculture aliments: it is small and disperse but multinationals have
an important role in it. Their aim is to increase sales in the interior market and
develop the export of transformed products.
d) Building industry: it is subject to many changes. During the last times is quite in
a crisis.

5.2.3. Leading industrial sectors.

High technologies have reached to Spain late and they have been faced with several
problems:
a) Dependency towards foreign countries for investigation and technology
b) Factories are small, with few capacity for competitiveness
c) Work force and studies have not been appropriated: high technologies are
concentrated in innovative regions, where technological parks are created.
These areas have some particular characteristics:
a. Concentration of innovation and research centres
b. Located in specific areas, are not very big but well linked with the
environment around and telecommunications
c. Located near metropolis or in medium cities with good quality
environment and services

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d. Integrated with the region in which they are, they demand services and
skilled workers.
The results of these industries are:
- They are attractive enough to attract other factories in areas known as
parks. They can exercise their attraction over multinationals and they tend
to be successful due to the high level of technology used.
- Their influence in areas around is not clear because in many cases they are
linked to foreign multinationals, being their direct impact in the region
more limited.
- Disequilibrium is bigger than before because they are concentrated in
certain areas: Madrid, Catalonia, Basque Country, Valencia and Andalusia,
near big cities or in dynamic axes.

5.3. Present structure and problems of Spanish industry

Spanish industry has some structural problems and as a result it is not well adapted to
the new technological cycles.

a) Factories size is not appropriate: a majority of them are small (less than 50
workers) or medium (from 51 to 500). They can adapt to the changes and the
conflicts are scarce. Their problem is that they are not competitive because
they are too small and they can not make great investments in research and
modernization. In addition to this, until recently they have been left apart from
the industrial policy.
b) Research is small because the investments in this concept are reduced. I+D
investments are concentrated in some sectors that are the most dynamic:
electronics, computers, pharmacy, and chemistry. Anyway this has been
changed during the last years in order to create more competitive factories.
c) Technological backwardness and dependency: There is little technology in
Spain and it tends to be imported and this is linked to the limited investments
in I+D. As a result, quality and productivity are limited and they are not
competitive, leaving Spain in a peripheral situation.

5.4. Modern trends and factors for industrial location.

They have been changed since the 1980s decade but they have maintained the
tendency for industrial concentration.

5.4.1. Present factors

The classic ones have lost importance due to the industrial crisis and due to the
influence of the third industrial revolution. The new factors are:
- Natural resources availability is not as important as before: communications
have improved, some means of transport such as ships are cheaper and
thanks to new technologies there are synthetic raw materials.

19


- Market size has enlarged
- Means of transport and communications are better
- Work force is an essential element, mainly in factories requiring qualified
personnel
- Innovation and ability for getting access to communication have become
essential elements.

5.4.2. Present trends for factory location: expansion and concentration

Due to the changes mentioned above, trends to locate industries have changed: it is a
general trend to locate industries in peripheral spaces, but the regions more
developed continue exercising attraction.

a) Industries were limited to peripheral region due to the following factors:
a. Great concentrations create problems because the spaces are full and
this makes more expensive infrastructures and conflicts are more
common, in addition to damage environment. Due to that they tend to
divert them to less conflictive areas.
b. Technological improvements
c. New capitalist strategies
d. Endogenous industrialization

b) Central spaces continue being attractive because they can offer infrastructures
that are required by some technological sectors.

5.5. Industrial spaces and disequilibrium

In Spain, industrial location presents disequilibrium between regions. There are very
different situations, with developed, developing and areas in crisis, or with
industrialised and non industrialised areas. The disequilibrium is more important in the
most dynamic sectors, because they tend to locate in the most developed regions.

The irregular distribution of industries influences in other disequilibriums linked to
them:
- population distribution
- richness
- infrastructures, equipment and
social services
- political importance.

This last factor can be negative for scarcely
developed regions because due to this
industrial development can be a key factor
in industrial policies.

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Taking into account industrial location, the following regions can be distinguished:

5.5.1. Developed regions

There are central spaces of metropolis, mainly Madrid and Barcelona. In the present
development trend we can find:
- traditional sectors are in decay or have been restructured
- industrial activity has recovered because many factories and firms have
their offices or part of their factories in these big cities
Industries are in a process of tertiarization and the result of that is the creation of
industrial or enterprise’s parks.

5.5.2. Areas and axes in development

There are the result of an endogenous industrialization. The following ones can be
found:
a) Around metropolis decreasing or restructuring industries, but there are others
in progress:
a. Industries coming from city centres have been established here. There
are traditional industries that have found in these areas a cheaper space
to develop. Normally they form industrial polygons with good
communications with the city.
b. Innovative factories or technological parks.

b) Around cities: there are a space in between the city and the agricultural space
around, an area very attractive for industrial development. Factories tend to be
small, with scarce capital: intensive productions doing non skilled works,
factories subsidiary of others. The main kind is that of polygons of industrial
naves that normally add to their small size some lacks in equipment or
infrastructures.

c) Industrial development axes: they are located in the main communication nets:
a. Ebro’s valley and Mediterranean (Girona-Cartagena). Motorways link
the South of Europe with this area. They have attracted state and
international multinationals. These areas have traditional industries and
there is a connexion with the agrarian regions around so sometimes the
industries are spread in the territory.
b. Some axes have developed locally: the net around Madrid expands to
the provinces of Castela-Mancha and there are other secondary axes
along some main routes (Tordesillas-Valladolid-Palencia).

d) Some rural areas have become the location for small companies and inversions,
with simple technology and demanding non skilled work force. The most
common are traditional workshops. Anyway, sometimes innovative industries

21


may appear thanks to the solidarity between factories or animated by
administrative advantages.

5.5.3. Regions and axes in crisis

There are some regions such as Asturias, Cantabria or some specific places. Basque
Country was included in this group for a time but nowadays its industry has recovered.

The characteristics of these regions are:
- There are regions specialised in sectors in crisis. Big factories are common
while medium and small have a smaller proportion and in the cases they
exist, they are linked to the big ones.
- The preparation for the work market is medium or small: conflicts are
frequent and the presence of unions is permanent.
- Environment has been affected for long.

These regions have been affected by a deindustrialization process and as a
consequence are involved in a demographic crisis and their position is peripheral as
decision centres or industrial areas.

Some of them have been recovered, such in the case of the Basque Country.

5.5.4. Regions of inducted or scarce industry

Areas of inducted industrialization are Aragon, Castile and Leon and Andalusia. They
benefited from the decentralization policy of the 1960s and at the moment they have
developed industrial areas.

Areas of scarce industry are Castile-Mancha, Extremadura, Baleares and Canary
islands. Their location is not competitive. In them important industries are not
frequent and sectors are traditional producing low value things. Castile-Mancha begins
to be the exception to the group thanks to its link with Madrid.

5.6. Industrial environmental problems

Industrial problems have an influence on environment if the following aspects are
taken into account:

a) Natural resources are over exploited
b) Some industries pollute the environment
c) Industries deteriorate natural landscapes statically.

5.7. Today’s industrial policy

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Nowadays it is characteristic of Spain’s industry the reduction of the role of the state
and the assumption of some measures to correct structure, location and
environmental problems.

5.7.1. Reduction of State’s intervention

The most characteristic forms of State intervention were:

a) Openness to the exterior: it has been possible thanks to the entrance in the EU
and due to world globalization.
a. EU: Spanish protectionism was left apart, increasing competitiveness; in
addition to this, the tariffs of the EU are small
b. Imports and exports have developed at entering the world net. Foreign
capitals have been inverted in the most dynamic sectors.
b) Companies of high profitability have become private. SEPI has been created
instead of INI to try to make of these industries profitable and able to compete
in a global world.

5.7.2. Policies to solve the structural problems

They have followed the same policy of the EU and the aim is to increase Spanish
products competitively. The main points are:
a) Since 1991 re-structuring has improved with the aid of European funds
b) Increase the competence of companies, mainly by supporting small and
medium industries.
c) Develop research
d) Reduce technological dependency

5.7.3. Policy to correct regional disequilibrium

Until recently interest was addressed to some sectors, mainly towards the big ones
that were in crisis, forgetting other regions. Nowadays there are two main areas of
action to correct those problems:

a) Policies for promoting industries
They are designed to take into account any kind of sector. The main objective is to
create competitive industries. The activities designed for this purpose are:
- Law for Incentivising Industry 1985. It helps not only to industries but also
to any other activity that can reduce the differences between regions, such
as some services, touristy activities and others.
- Regional Development agencies: they coordinate activities to support
industries in Autonomous Regions. Their capital is public and they stress
activities including technologies and medium and small companies.

23


b) Policy of endogenous industrialization
They try to develop the potentialities of each region. The bases of this policy are:
- micro-planning: more help of the regional governments
- support for medium and small companies
- promote innovation: to achieve these purposes there are two kinds of
organizations:
o Societies for developing industries
o Promote industrial districts

5.7.4. Environmental policies

After the 70s there is a general trend against the environmental problems created by
industries. The main activities for correcting them are:

a) Sustainability as long as use of resources are
concerned
b) About pollution:
a. Protect spaces and soils
b. Environmental impact must be studied in
advance
c. Promote research to create green or
ecological industries
d. Corrective measures such as analysis of Environmental Advisories
c) Referring to the aesthetical value of landscape, renew areas formerly used for
industries that nowadays are out of use.

6. Industrial spaces in the Basque Country

In the Basque Country industry and tertiary sector have a notorious importance.

6.1. Raw materials and energy

The most important are
iron from mines and
stones. Iron was
essential for the
development of
industry and in the
category stones silica,
ofita, lime, marble and
slate. Other raw

24


material is wood from the forests, in a time used for iron elaboration and nowadays
present in paper industry.

As long as energy sources are concerned, the Basque Country is dependent for it does
not produce energetic minerals and hydroelectricity is not enough to supply all the
demand, the same as alternative energies. To face these problems a new energetic
plan has been designed.

6.2. Basque industry until 1975 crisis

a) Beginning of industrialisation

It started quite early, at least earlier than in other regions of Spain. Several are the
factors that made possible this development:
- skilled work force trained in hand work
- commercial bourgeoisie
- increase in population resulting in abundant work force and enlargement of
markets for the products

Despite these factors, there were different situations:
- Biscay: Industrialization started during the last quart of the 19 th century. The
main reason for this development was the existence of iron mines
appropriate for the production of steel. In 1868 thanks to some mine Laws
connections with Britain started to export Biscayan iron. Thanks to this
trade capitals piled and it was possible to invest in creating more industries
and a bank that could help to develop the region. Production is based on
iron, and metallic transformations.
- Guipuzcoa: It started in the second years of the 19 th century thanks to the
entrepreneurship of the bourgeoisie. New sectors and productions were
introduced and for that foreign workers came. Production was diversified
and it was spread along different valleys.
- Alava and Navarre: It started later, at the end of 19 th century and beginning
of the 20th century. In Vitoria metallurgic and agricultural industries were
created but, in general, industry was traditional. In Continental Basque
Country the traditional sector included shoe making and transformation of
agricultural and fishing products. Scarcely were modern industries created
in these areas.

b) First third of the 20th century:

Basque industry was influenced by the international situation, with moments of
expansion (WW1) and moments of backwardness (1929 crisis).

c) Civil War and aftermath (1936-1959)

25


Industrialisation process was stopped due to:
- destructions during war operations
- limits to importation of raw materials and energy
- protectionist policy that eliminated any attempt of modernization.

Thanks to protectionism several factories were created but their production was not
appropriate.

d) Development (1960-1975)

Biscay and Guipuzcoa experienced a huge increase whereas Alava and Navarre started
their industrialization process.

- Biscay: the main industrial concentration was settled around in Bilbao,
around the outlet, in the left margin (Baracaldo, Sestao and Trapaga). Heavy
industry was concentrated and so were the urban concentrations,
expanding to other areas of the Ibaizabal valley (Basauri and Galdacano and
Duranguesado). From there it expanded to Guipuzcoa: Donostialdea, Deva,
Urola and Oria valleys.
- Guipuzcoa: Industries concentrated in Deva, Urola and Oria valleys and the
last one was connected with San Sebastian area.
- Alava and Navarre: they started their development in this moment, thanks
to local and central administration that backed the project (cheap soils,
fiscal advantages, infrastructures).
- Continental Basque Country: the industrialization was more limited and
there were huge differences between the coast and the interior. The area
known as BAB (Bayonne, Anglet, and Biarritz) is the centre of that economy
and third sector is more important than industry.

6.3. Crisis and restructuring

6.3.1. Problems and consequences

The causes of the 1975 crisis were:
- increase of power prices (petroleum)
- apparition of new sectors linked to the technologies of third industrial
revolution
- competition of recently industrialised states to traditional industry because
their salaries were lower

The crisis affected seriously Biscay and Guipuzcoa because industry had an important
role in them.

The consequences of the crisis were:

26


- factories closed down or they reduced their workforce and were
restructured
- reduction of the importance of industry in the GDP
- unemployment
- reduction of family income
- reduction of investments
- deindustrialization
- Basque Country’s industry lost weight in the Spanish industrial system.

6.3.2. Policy for restructuring industry

Policies for confronting the crisis were put into practice with a double objective:
restructuring and reindustrialization.

a) Restructuring: it started in 1982 to adapt industries to the new technological
circle, management, production and improvement of jobs.
- State’s aid was directed to iron industry but the results were not the
expected. Ten years later new programmes were designed.
- Basque Government added other complementary measures: aids for
factories in difficulty in order to improve management and renew the
process for the creation of new industries. These initiatives were the ones
having the best results.

b) Reindustrialization or policies for support industries: They were concentrated
in space policies to promote industries and the modernization of others. The
most important were the policies to prepare land for industries using ZUR
(Zones of urgent reindustrialization) and GBI (regions in crisis).
- lands for industry allowed the creation of small and medium factories in
industrial polygons or technological parks (Zamudio).
- Area of urgent reindustrialization in the Nervion: they were aimed at
promoting services, chemistry, and metallurgy of transformation.
- ZUR affected to industries in crisis. The money used was limited so medium
and small industries were left apart. The investments were conducted to
plastic, chemistry and machinery.

Other policies were aimed at modernizing the industries or making them more
competitive. In many cases they were conducted to new technologies or innovative
productions.

6.3.3. Territorial impact of the crisis

The influence of the crisis was not equal in all the Basque territories. In addition to this,
industry initiated its recovery from 1994 and on.

27


- Biscay: it was the most affected by the crisis. The big Bilbao lost part of its
influence and new axes appeared (Plencia-Mungia, Txorierdi’s corridor).
- Guipuzcoa: the restructuring reached different areas because industry was
spread. The negative consequences were important. The Deva valley is the
region where more modernising programmes have been put into work.
- Alava: restructuring was not dramatic because the development of the
region was reduced. It was centred in Llodio, Amurrio and Gasteiz.
Nowadays it is one of the areas in development, at once with Navarre,
because projects coming from the coast are developed in this region.

6.4. Today’s situation

The characteristics are:
- production based on traditional activities (metal)
- structure based on medium and small industries
- I+D+I (investment-development-innovation) has managed to get a good
level, higher than in Spain
- qualified work force, recycled in many enterprises
- polarised localization and disequilibrium among zones
- environmental problems
- dynamic industrial policy

6.4.1. Industrial production

The most important is metal and, in a secondary level, construction, materials for
transports, plastic and electrical materials. This is, it is specialised in two sectors:
- Traditional activities: their expansion is limited for they use traditional
techniques. To be competitive they need to produce at low cost but they
are not competitive.
- Equipment industries require technology and intermediaries.

The possibilities offered by new technologies are not well used. Some sectors have an
important added value and they have developed quickly but traditional sectors must
take advantage of renewal opportunities.

6.4.2. Industrial structure

a) The size of the factories is small (less than 50 workers). Due to this it is more
difficult to compete, get money loans, modernize, investigate and open to
international competition. In many cases they depend on foreign decision
centres because sometimes they are branches of multinationals. But the size
can be sometimes an advantage because in this way they can adapt to changes
easier. Other important element is that the small size makes possible the
cooperation between factories. In the Basque Country there are “clusters”, this

28


is, groups of business of the same branch that, in this way, aim at being more
competitive.

b) Activities based on research, development and technological innovation are
more important in the Basque Country than in other regions. This is the result
of a series of factors:
- Basque net of technology in the Regional Plan that puts special stress on the
needs of the factories and the National Plan has an active role in them.
- Special interest devoted to technological parks
- Availability of technological centres, linked to the demands of those
businesses.

c) Work force: training and education are linked to the needs of the factories and
workers of factories involved in a process of restructuring have been recycled.

6.4.3. Industrial localization

There is certain resistance to changing the patterns for locating industries. In general
they still being the same that were determinant in the 70s decade.

Regionally, there is an inverted triangle which three vertices are the three provincial
capitals, and there is a contrast between the two coastal and the interior. Bilbao and
San Sebastian are linked through a corridor (it crosses the area of Durango and the
Deva valley) and other corridor of smaller density following the coast. On the contrary,
there is not a clear link with Vitoria.

The Biscayan model is polarised, around the Big Bilbao, the case of Alava is macro-
cephalic (Vitoria) and in Guipuzcoa the distribution is more balanced. In the three
territories a majority of the industries and services are centred on the capital cities and
the links between industries are bigger each time.

Alava and Navarre are developing their industries. There are very dynamic and they
are involved in a process of change, linked to European and Spanish development axes.
The Atlantic axis has lost weight in favour of the Ebro. In this strategic location the
Basque Country is in a favourable position: a lot of industrial projects come from the
Atlantic area but due to the high prices of soil and its scarcity they find new locations
in this corridor. In addition to this, infrastructure and communications are good in this
region, the same as life-quality. Due to all these reasons the Southern region has
known an important development.

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6.4.4. Environmental problems

The main problems are:
- pollution of atmosphere, water and soils
- rubbish generation and their treatment
- industrial waste

6.4.5. Industrial policy

Several measures have been taken in order to solve the problems in the fields of
structure, space and environment.

a) Problems in production and structure: there are six lines: investment,
innovation, international openness, knowledge, quality and cooperation. The
main activities are:
a. Development of new products, mainly in new sectors, such as
technologies and information.
b. Aids to medium and small factories to modernize and foster cooperative
attitudes that can be basic for increasing quality, improving

30


management and becoming more competitive. In this order clusters are
essential
c. Improve research and development (I+D) to prepare companies to be
competitive internationally
d. Support workers recycling in restructured companies.

b) Policies related to disequilibrium between regions:
a. Support the links between regions and develop industrial projects to
develop depressed areas, by creating polygons and medium industries.
b. Special attention to regions in crisis, such as the Bilbao outlet or
Pasajes’s port.
c. Policies to control environmental problems, controlling air, water and
soils situation and controlling waste. There are several policies for
recycling, such as those of Altos Hornos. In other cases degraded areas
are being reconverted for other uses such as leisure centres, as is the
case in some areas in Guipuzcoa.

31

Unit 8 industrial spaces

Unit 8 industrial spaces

Unit 8 industrial spaces

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